Alzheimer's disease is a devastating neurodegenerative disorder characterized by the cerebral deposition of -amyloid peptides (A), generated by sequential proteolysis of amyloid precursor protein (APP) by BACE1 and ?-secretase. There has been considerable epidemiological interest in the relationship between cholesterol and susceptibility to Alzheimer's disease. Evidence from a variety of in vitro and in vivo studies indicates that cholesterol- and sphingolipid-rich membrane microdomains, termed lipid rafts, might be a critical link between cellular cholesterol levels and amyloidogenic processing of APP. Indeed, each of the ?-secretase subunits and APP C-terminal fragments (CTF) are enriched in lipid rafts isolated from brain; full-length APP and BACE1 are also found in lipid rafts, albeit at lower levels. Notably, BACE1 and two ?-secretase subunits (nicastrin and APH1) undergo S-palmitoylation, a post-translational lipid modification commonly found in raft-associated proteins. In addition to lipid raft targeting, S-palmitoylation is a critical modification that dynamically regulates membrane trafficking and modulates the function of proteins such as neuronal transmembrane (AMPA and NMDA receptors) and cytosolic proteins (PSD-95). The in vivo physiological significance of S-palmitoylation of APP secretases in neurons remains unknown. We have begun to address this important issue using transgenic mice and by applying novel live-cell imaging strategies in hippocampal neurons. In unpublished preliminary studies we observe a significant decrease in amyloid burden in the brains of transgenic mice expressing S-palmitoylation-deficient ?-secretase subunits. Moreover, in hippocampal neurons we have discovered S-palmitoylation-dependent differential regulation of BACE1 trafficking to the neuronal cell surface, localization in dendritic spines, and axonal transport. These later findings are highly relevant to Alzheimer's disease pathogenesis because in neurons APP is trafficked anterogradely along peripheral and central axons, and proteolytically processed during transit. Therefore, it is extremely important to perform functional analysis of S-palmitoylation-deficient BACE1 in neurons at physiological expression levels in vivo to unequivocally determine how S-palmitoylation of BACE1 regulates APP processing and amyloid deposition in the brain. The following are the specific aims of this investigation. Aim 1: To perform functional analysis of ?-secretase S-palmitoylation in transgenic mice. Aim 2: To perform functional characterization of BACE1 S-palmitoylation in vivo. Aim 3: To investigate the dynamic regulation of BACE1 trafficking by S-palmitoylation. Our studies will uncover novel and significant insights on differential regulation of AP secretase localization and function by S-palmitoylation in cultured hippocampal neurons and in vivo.